by J. Orlin Grabbe

The sequence of events leading the banking software
company Systematics (ALLTEL Information Services) to
hire a libel attorney to deny it was operating on behalf
of the U.S. National Security Agency (NSA) began more
than a decade ago.

In the early 1980s, the War on (Some) Drugs and the War
on (Some) Terrorists led to various U.S. government
initiatives to "follow the money."

A Senate subcommittee recommended that the Treasury
Department should work with the "Federal Reserve Board
to develop a better understanding of the financial
significance and use of currency repatriation data as
well as information about foreign depositors' currency
deposits." (U.S. Senate Permanent Subcommittee on
Investigations, *Crime and Secrecy: The Use of Offshore
Banks and Companies*, U.S. Government Printing Office,
February 1983.)

Over at the National Security Council, Norman A. Bailey,
an economist who understood the electronic flow of money
through SWIFT, Fedwire, and CHIPS, urged the involve-
ment of the National Security Agency (NSA), the Ft.
Meade-based Defense Department agency for signals
intelligence and communications security.

Bailey "confirms that within a few years the National
Security Agency . . . had begun vacuuming up mountains
of data by listening in on bank wire traffic. It became a
joint effort of several Western governments with the
Israelis playing a leading role, since they were the main
target of terrorism" (James R. Norman, "Fostergate").

The NSA proceeded to jack into Fedwire, CHIPS, and
Swift. Doing so would be a priority if the aim was to
monitor banking transactions. But even while essential,
this in itself would be of limited utility without further
information. What is the use of monitoring interbank
transfers that are DES-encrypted? And even if you break
the code, or have the keys, what remains is a money amount
transferred from one account number at one bank to another
account number at another bank. Who owns the accounts?

One way of finding out was the CIA method: to sneak agents
working under cover as computer hardware or software suppliers
into computer rooms. Sometimes a lowly computer programmer has
more access to banking information than does a senior executive,
so this method could enable one to piece together account names
and customer information with account numbers. But such an
approach is not efficient. Efficient spying implies access at
all times.

The evidence indicates that at some point NSA made the logical
decision that continual access meant the NSA had to become a
major provider of banking software.

James R. Norman, Senior Editor at Forbes--in an article
entitled "Fostergate," an article scheduled to appear in
the May issue of Forbes, but killed at the last minute by
Steve Forbes, apparently through the persuasive urging of
Casper Weinberger, the former Defense Secretary who is
Publisher Emeritus at Forbes--makes specific allegations
about several companies which may have become part of such
an NSA operation, and about the role of Vincent Foster:

"Forbes' sources say that since at least the late 1970s,
Foster had been a silent, behind-the-scenes overseer on
behalf of the NSA for a small Little Rock, Ark., bank data
processing company. Its name was Systematics Inc., launched
in 1967 [ 1968? ] and funded and controlled for most of its
life by Arkansas billionaire Jackson Stephens, a 1946 Naval
Academy graduate. Foster was one of Stephens' trusted deal-
makers at the Rose Law Firm, where he was partner with
Hillary Rodham Clinton, Webster Hubbell and William Kennedy
(whose father was a Systematics director). Hubbell also
played an overseer role at Systematics for the NSA for
some years according to intelligence sources.

"Systematics has had close ties to the NSA and CIA ever
since its founding, sources say, as a money-shuffler for
covert operations. It is no secret that there were billions
of dollars moving around in 'black' accounts--from buying
and selling arms to the Contras, Iran, Iraq, Angola and
other countries to paying CIA operatives and laundering
money from clandestine CIA drug dealing. Having taken
over the complete computer rooms in scores of small U.S.
banks as an 'outsource' supplier of data processing,
Systematics was in a unique position to manage that covert
money flow. Sources say the money was moved at the end of
every day disguised as a routine bank-to-bank balancing
transaction.... ....

"Systematics' money-laundering role for the intelligence
community might help explain why Jackson Stephens tried to
take over Washington-based Financial General Bankshares in
1978 on behalf of Arab backers of the Bank of Credit and
Commerce International. BCCI's links to global corruption
and intelligence operations has been well documented, though
many mysteries remain.

"According to a lawsuit filed by the Securities and Exchange
Commission, Stephens insisted on having then-tiny Systematics
brought in to take over all the bank's data processing.
Representing Systematics in that 1978 SEC case: Hillary
Rodham Clinton and Webster Hubbell. Stephens was blocked
in that takeover. But FGB, later renamed First American,
ultimately fell under the domination of BCCI through Robert
Altman and former Defense Sec. Clark Clifford. According
to a technician who worked at First American in Atlanta,
Systematics became a key computer contractor there anyway.

"In the 1980s Systematics' business boomed. When it first
sold stock to the public in 1983, revenues were $64 million.
That had risen to $230 million by the time Stephens arranged
Systematics' sale to Alltel Corp., a telephone holding
company which then moved its headquarters to Little Rock.
Last year Systematics sales hit $861 million--a third of
Alltel's total. Stephens now owns more than 8% of Alltel
and wields significant influence over the company. ....

"Another curious company is Arkansas Systems, founded in
1974 by Systematics employee and former U.S. Army 'analyst'
John Chamberlain. Located just down the road from
Systematics, Arkansas Systems specializes in computer
systems for foreign wire transfer centers and central banks.
Among its clients, Russia and China, according to Arkansas
Systems president James K. Hendren, a physicist formerly
involved with the Safeguard anti-missile system. Arkansas
Systems was one of the first companies to receive funding
from the Arkansas Development Finance Authority, an agency
created by then Gov. Bill Clinton that is now coming under
congressional scrutiny.

"What does Alltel have to say about all this? 'I've never
heard anything so asinine in all my life,' steams Joe T.
Ford, Alltel's chairman and the father of Jack Stephens'
chief administrative aide."

Charles O. Morgan, on the other hand, claims omniscience
with respect to what did not happen with respect to
Systematics.

[to be continued]

First Posted to the Internet July 3, 1995
Web Page: http://www.aci.net/kalliste/